Gold price reaches all-time high in domestic market

Gold prices have been breaking records in the international as well as national markets for the past four to five months. In the beginning month of this fiscal year, the price of gold per tola (11.66 grams) surpassed Rs 150,000. Trading at Rs 152,600 per tola, a new record has been set in the domestic market on Sunday. 

This is an all time high. Will the record remain? Analysts claim it might even go higher. Improvements seen in US economy and the share market have affected the prices of gold, says Kiran Bhai Bajracharya, general secretary of Federation of Nepal Gold and Silver Dealers Association (FENEGOSIDA)

Why are prices escalating?

Compared to the international market, Nepali markets seem to be experiencing higher increases. Due to the increase in customs on gold imports from 15 percent to 20 percent this fiscal year, gold prices are soaring, says Manik Ratna Shakya, former chairperson of FENEGOSIDA. Appreciation of the American dollar, as well as rise in taxes, have led to higher gold prices in Nepal compared to international markets. Traded at $1,288 per ounce five years ago, gold price in the international market today has almost doubled. In the domestic market, however, the price has increased by around two and a half times. 

“The reason for increasing gold prices in Nepal is the high customs rate. This increases the cost.” says Shakya. “A few years ago, Rs 10,000 was paid in customs duty. Now, the customs charge Rs 28,000,  making gold more expensive. Along with that, the dollar exchange rate has also been increasing. As the value of the dollar increases, so does the price of gold.” 

Looking at previous patterns, Shakya analyzes the price to rise further. Prolonged Ukraine-Russia and Israel-Palestine wars have also contributed to the increase in gold price, as many countries consider gold a secure and rewarding asset.

How much gold do countries have?

As gold is valued all around the world, all countries want to secure it as a source of wealth. According to the World Gold Council, in recent times, China, Germany, and India rank highest in the purchase of gold. Although America currently owns more than eight thousand tons of gold, its lead has diminished in the past decade, with China holding more than 20,000 tons of gold.